Change is happening and the pace of change is accelerating. Most of the changes that are nearing will not be welcome. Some will be enormously challenging. The global consulting giant, KPMG, has identified 10-megaforces that it contends business will have to confront within the next twenty years. And the firm is stressing to business leaders that these trends are all interconnected and have to be addressed collectively as well as separately.
# 1 - Climate Change
KPMG calls climate change "the one global megaforce that directly impacts all others."
"Predictions of annual output losses from climate change range from 1% per year, if strong and early action is taken, to at least 5% a year if policymakers fail to act."
# 2 Energy and Fuel
KPMG foresees great volatility and unpredictability due to increasing demand, production uncertainties and regulatory impacts due to climate change.
# 3 Material Resource Scarcity
Again it's more buyers chasing fewer sources and, in some cases, dwindling supplies of products. KPMG warns of 'dramatic' increases in demand for resources coupled with increasing trade restrictions.
# 4 Water Scarcity
It is widely considered the second greatest megathreat to civilization but KPMG ranks water scarcity as fourth for business. The firm notes that, by 2030, demand for freshwater will outstrip supply by 40%. Businesses will be vulnerable to water shortages and disruptions, price volatility and to what it calls "reputational" challenges. It also warns of security risks caused by conflicts over water supplies.
# 5 Population Growth
Here KPMG sees overpopulation stressing ecosystems and creating pressures of supply of food, water and materials.
# 6 Wealth
While the middle class in North America may be in self-inflicted decline, the middle class in the emerging economies is burgeoning. The global middle class is expected to grow 172% between 2010 and 2030. Business, it warns, will face increasing problems in meeting the consumer demand in the face of environmental and material declines.
# 7 Urbanization
KPMG foresees the trend to urbanization to progress and that, by 2030, the developing regions of Asia and Africa will also have the majority of their populations living in urban areas.
# 8 Food Security
The UN Food and Agriculture Organization recently announced our world had moved into a state of permanent food insecurity. KPMG warns that global food prices are expected to rise between 70-90% by 2030. In already water-scarce regions, industry will face a more difficult competition with agriculture for available water resources.
# 9 Ecosystem Decline
Here KPMG notes a big transition for business. Historically ecosystem decline has been a "reputational" problem for business. That's changed. Now ecosystem decline is having a direct and substantial impact on the same businesses that ignored it in the past.
"More companies are realizing how dependent their operations are on the critical services these ecosystems provide. The decline in ecosystems is making natural resources scarcer, more expensive and less diverse; increasing the costs of water and escalating the damage caused by invasive species to sectors including agriculture, fishing, food and beverages, pharmaceuticals and tourism."
# 10 Deforestation
KPMG sees deforestation as a problem mainly to business revenues. In this narrow context it concludes that, even as forest lands decline by 13% by 2030, lumber companies and 'downstream' industries such as pulp and paper will face increasing regulation to reverse deforestation and consumer insistence on ethical forest management.
The report overall presents a business-oriented approach that at times minimizes or negates social and environmental issues arising out of these same megaforces. Yet the KPMG report illustrates that, as individuals and societies, we have to keep up with the business sector in preparing for these same changes to ensure that governmental and commercial responses meet our needs and interests above all others. If we allow it, our government will shape its policies on these challenges to conform to the demands of business even at the expense of our own best interests. That is the dark side of the corporatism that has infested our Parliament.